A less than straightforward situation!

modernmillie_2

Hi, I'd be grateful for some advice.

My partner and I want to buy a new home, we currently rent. We'll have a deposit which is approx £80k (35% of the purchase price), and the remaining mortgage would be just over twice our joint income. However, I'm about to start a new permanent job. I have a contract, and there's no probation period.

My partner is older than me, and I've been told we could have a mortage, but we would only be able to take a 15 year mortgage - the period until his retirement (he currently has no pension provision). This is doable at a tight pinch for us, and I've been offered a 2 year variable tracker, 1.5% over BoE base rate, with a £500 fee, which is pretty good, but obviously over 15 years the monthly repayments are quite high.

Does anyone know if we would be able to get a good deal with another provider over a slightly longer period - 20 years instead of 15? Would anyone offer us a 25 year mortgage?

Thanks!

opinions4u

And what would you do when he comes to the end of his working life and you have 10 years left on the mortgage?

Additionally, if it's a stretch when base rate is 0.5%, what will you do as and when interest rates shoot up?

It doesn't sound like a good proposition to a lender. Is it really a good idea for you to stretch yourselves this way?

modernmillie_2

Wow, thanks for nothing opinions4u - well named aren't you?!! Helpful to all posters, oh really....

I'm not going to get into this sort of discussion on an internet forum.

We have considered this - not totally stupid - and I'm not going to explain or justify the question I've asked.

I wasn't asking for the sort of 'advice' given above - I'm trying to find out if there's a provider that would consider a 20 year term instead of 15 for a couple in our situation - and would be very grateful if anyone knows if there is.

opinions4u

modernmillie wrote: »

Wow, thanks for nothing opinions4u - well named aren't you?!! Helpful to all posters, oh really....

I think it's food for thought for any other readers of the forum who are considering borrowing in to retirement to get them to consider how they will afford the payments. Not just now, but when they know their income will drop.

I'm not going to get into this sort of discussion on an internet forum.

Your choice. The questions asked are relevant though and would help a mortgage broker to identify potential ways forwards for you if they were answered. It is, by the way, an internet forum that is designed for this sort of discussion.

We have considered this - not totally stupid - and I'm not going to explain or justify the question I've asked.

I didn't call you stupid. I'm glad you've considered it.

I wasn't asking for the sort of 'advice' given above

As I just said, understanding why you want to do something and how you intend to pay for it are quite relevant issues for lenders to address. If a broker understands your circumstances better they are more likely to be able to give you a better answer to your questions.

I'm trying to find out if there's a provider that would consider a 20 year term instead of 15 for a couple in our situation

Based on what you posted, no. Depending on the answers to the questions I asked, maybe.

What I did was to try and get you to look at it from the potential lender's point of view. If you can answer the questions that they will rightly answer before you apply (rather than after they choose to decline you) then it could save you several hunded pounds in costs.

modernmillie_2

So if you were trying to be 'helpful' it would have been useful if you'd been clearer about that, rather than sounding confrontational and dismissive. However.

It appears that I can get the mortgage (and in fact more than we want to borrow) over 25 years solely in my name. Therefore, over 20 or 25 years, with his income too, I don't understand the problem - if I can get it solely based on my income, then why not over the same period of time based on both our incomes?

Back to my original question then - can we get a mortgage in both names over 20 years, or even 25 years, taking into account I won't have been in my job for very long when we want it, and he has approx 15 years to retirement?

getmore4less

We got a mortgage that was into the OH retirement but this was 10 years ago, and we had pension provision for the OH

Since then lending has tightened.

I think you would need to show that you can carry the mortgage on your income alone at that time(or now), that was the argument we used but my OH had pension income to back that up.

Since you have looked at the single lending route and that looks OK you might be able to add another person to the mortgage, married people do it all the time when one has no income at all(allthough that is different).

But if you find the differnece in payments of £200pm(between 15y(£750pm) and 20y(950pm) on a £149k loan ) a stretch that means if rates go over 4.6% from the current 2% then you will be struggling again.

With a joint income of £75k over £4kpm this should not be a problem perhaps a SOA to look at where all the money goes.

modernmillie_2

Cheers getmore4less. TBH, saying it was a 'tight pinch' is a bit of an exaggeration - I am being very cautious, and I think I was thinking about how much it would be if interest rates did go up - still affordable, but if they absolutely soared, then on a 15 year mortgage, it would be a bit squeaky. We would definitely prefer 20 years if we can get it, and then I would be happy that we could afford the repayments even if interest rates went way up.

zygurat789

How much did you consider that interest rates might rise to? I have paid mortgage interest at 12% during a period of high inflation. Given that quantitative easing is effectively increasing the money supply which in itself can cause inflation it is not beyond the bounds of probability that interest could again reach these levels which would nearly double your repayments.

getmore4less

zygurat789 wrote: »

How much did you consider that interest rates might rise to? I have paid mortgage interest at 12% during a period of high inflation. Given that quantitative easing is effectively increasing the money supply which in itself can cause inflation it is not beyond the bounds of probability that interest could again reach these levels which would nearly double your repayments.

Wage inflation also happens then so there is a short term 6m-1y squeeze I remember 2 inflation pay rises a year when inflation was running high.

If you can get through a period like this the mortgage that is left becomes relativly easy from then on, the debt is inflated away.

getmore4less

modernmillie wrote: »

Cheers getmore4less. TBH, saying it was a 'tight pinch' is a bit of an exaggeration - I am being very cautious, and I think I was thinking about how much it would be if interest rates did go up - still affordable, but if they absolutely soared, then on a 15 year mortgage, it would be a bit squeaky. We would definitely prefer 20 years if we can get it, and then I would be happy that we could afford the repayments even if interest rates went way up.

Even with a 20y loan I think you need to factor in loss of income at year 15, overpayments would protect against this and interest rate rises.

I would review the budget now and look to have payments give <15y target. The other factor is how much younger are you, when do you need to be mortgage free(I don't need to know but something to think about) and what joint retirement income plans do you have.

One thing I do know that having one partner retired and the other still needing to work(age difference or mortgage to pay) does need to be though, it might seem idilic now but in 15y you will feel very different.

Will the OH actualy stop earning or can they carry on, that will help a lot.